UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended DECEMBER 31, 2004
                               -----------------

                                       Or

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________to _________________

Commission File No.        0-8693
                    ----------------------


                              TRANSNET CORPORATION
                              --------------------
             (Exact name of registrant as specified in its charter)

        DELAWARE                                         22-1892295
--------------------------------                         ----------
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation or organization)

45 COLUMBIA ROAD, SOMERVILLE, NEW JERSEY                 08876-3576
----------------------------------------            --------------------
(Address of principal executive offices)                 (Zip Code)

Registrant's Telephone Number, Including Area Code:     908-253-0500
                                                        ------------


--------------------------------------------------------------------------------

Former name, former address and former fiscal year, if changed since last Report

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                                                Yes _X_   No ___

Indicate by check mark whether the registrant is an accelerated filed (as
defined in Rule 12b-2 of the Exchange Act)

                                                                Yes ___   No _X_

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of February 8, 2005: 4,818,304.

<PAGE>


                              TRANSNET CORPORATION
                                    FORM 10-Q

                                TABLE OF CONTENTS



                                                                        PAGE NO.
PART I.  FINANCIAL INFORMATION
-------  ---------------------

         Consolidated Balance Sheets
                December 31, 2004 (unaudited)  and June 30, 2003               1


         Consolidated Statements of Operations (unaudited)
                Three Months Ended December 31, 2004 and 2003                  2
                Six Months Ended December 31, 2004 and 2003                    3


         Consolidated Statements of Cash Flows (unaudited)
                Six Months Ended December 31, 2004 and 2003                    4


         Notes to Consolidated Financial Statements                            5


     Item 2.  Management's Discussion and Analysis                             8


     Item 4.  Controls and Procedures                                         11


PART II.  OTHER INFORMATION
--------  -----------------

     Item 6. Exhibits and Reports on Form 8-K                                 12

     Signatures                                                               12
     Certifications                                                           13







                                       i.
<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                                 December 31,         June 30,
                                                    2 0 0 4           2 0 0 4
                                                 ------------      ------------
                                                 (unaudited)
ASSETS:
CURRENT ASSETS
   Cash and Cash Equivalents                     $  5,789,538      $  7,064,644
   Accounts Receivable - Net                        3,910,243         3,902,458
   Inventories                                      1,456,009         1,131,503
   Other Current Assets                                88,376                 0
   Deferred Tax Asset                                 458,076           195,649
                                                 ------------      ------------

   TOTAL CURRENT ASSETS                          $ 11,702,242      $ 12,294,254

PROPERTY AND EQUIPMENT - NET                          534,461           438,251


OTHER ASSETS                                          324,150           231,104
                                                 ------------      ------------

   TOTAL ASSETS                                  $ 12,560,853      $ 12,963,609
                                                 ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
   Accounts Payable                              $    600,570      $    364,228
   Accrued Expenses                                   136,009           210,022
   Income Taxes Payable                                    --             9,826
   Floor Plan Payable                                 446,330         1,052,021
                                                 ------------      ------------

   TOTAL CURRENT LIABILITIES                     $  1,182,909         1,636,097

DEFERRED TAX LIABILITY                                 58,220            30,976

COMMITMENTS AND CONTINGENCIES                              --                --

STOCKHOLDERS' EQUITY:
   Capital Stock - Common, $.01 Par Value,
   Authorized 15,000,000 Shares; Issued
   7,391,024 Shares at December 31, 2004
   and June 30, 2004
      [of which 2,585,220 are in Treasury
      as December 31, 2004 and June 30, 2004]          73,910            73,910

   Paid-in Capital                                 10,559,445        10,559,445

   Retained Earnings                                7,839,204         7,816,016
                                                 ------------      ------------

   Totals                                          18,472,559        18,375,461
   Less:  Treasury Stock - At Cost                 (7,152,835)       (7,152,835)
                                                 ------------      ------------

   TOTAL STOCKHOLDERS' EQUITY                      11,319,724        11,296,536
                                                 ------------      ------------

   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $ 12,560,853      $ 12,963,609
                                                 ============      ============

See Notes to Consolidated Financial Statements.


                                       1
<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                 THREE MONTHS ENDED DECEMBER 31,
                                                 ------------------------------
                                                   2 0 0 4           2 0 0 3
                                                 ------------      ------------
Revenue
   Equipment                                     $  3,872,927      $  3,492,342
   Service                                          3,790,351         3,894,349
                                                 ------------      ------------

Total Revenue                                       7,663,278        7, 386,691
                                                 ------------      ------------

Cost of Revenue
   Equipment                                        3,570,140         3,176,402
   Service                                          2,746,990         2,895,565
                                                 ------------      ------------

Total Cost of Revenue                               6,317,130         6,071,967
                                                 ------------      ------------

Gross Profit                                        1,346,148         1,314,724

Selling, General and Administrative Expenses        1,622,443         1,327,019
                                                 ------------      ------------

Operating (Loss)                                     (276,295)          (12,295)

Other Income
   Interest Income                                     10,680            12,638
                                                 ------------      ------------


Income Before Tax (Benefit)                          (265,615)              342

Income Tax (Benefit)                                 (124,403)               --
                                                 ------------      ------------

Net (Loss)/Income                                $   (141,212)     $        342
                                                 ============      ============

Basic Net (Loss) Per Common Share                $      (0.03)     $         --
                                                 ============      ============

Diluted Net (Loss) Per Common Share              $      (0.03)     $         --
                                                 ============      ============

Weighted Average Common Shares
   Outstanding - Basic                              4,805,804         4,774,804
                                                 ============      ============

Weighted Average Common Shares
   Outstanding - Diluted                            4,805,804         4,923,646
                                                 ============      ============

See Notes to Consolidated Financial Statements.

                                       2
<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                  SIX MONTHS ENDED DECEMBER 31,
                                                 ------------------------------
                                                   2 0 0 4           2 0 0 3
                                                 ------------      ------------
Revenue
   Equipment                                     $ 10,489,015      $  8,831,877
   Service                                          7,867,490         8,189,045
                                                 ------------      ------------

Total Revenue                                      18,356,505        17,020,922
                                                 ------------      ------------

Cost of Revenue
   Equipment                                        9,604,141         7,928,905
   Service                                          5,660,994         6,189,087
                                                 ------------      ------------

Total Cost of Revenue                              15,265,135       14, 117,992
                                                 ------------      ------------

Gross Profit                                        3,091,370         2,902,930

Selling, General and Administrative Expenses        3,324,193         2,904,928
                                                 ------------      ------------

Operating (Loss)                                     (232,823)           (1,998)

Other Income
   Interest Income                                     20,827            36,331
                                                 ------------      ------------


Income Before Tax (Benefit)/Expense                  (211,996)           34,333

Income Tax (Benefit)                                 (235,184)               --
                                                 ------------      ------------

Net Income                                       $     23,188      $     34,333
                                                 ============      ============

Basic Net Income Per Common Share                $         --      $       0.01
                                                 ============      ============

Diluted Net Income Per Common Share              $         --      $       0.01
                                                 ============      ============

Weighted Average Common Shares
   Outstanding - Basic                              4,805,804         4,774,804
                                                 ============      ============

Weighted Average Common Shares
   Outstanding - Diluted                            4,935,243         4,912,276
                                                 ============      ============

See Notes to Consolidated Financial Statements.


                                       3
<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                   SIX MONTHS ENDED DECEMBER 31,
                                                   -----------------------------
                                                      2 0 0 4          2 0 0 3
                                                   -----------      -----------

OPERATING ACTIVITIES:
    Net Income                                     $    23,188      $    34,333
                                                   -----------      -----------
    Adjustments to Reconcile Net Income
      to Net Cash:
    Depreciation and Amortization                  $    87,497      $    78,135
    Provision for Doubtful Accounts                         --          (10,000)
    Deferred Tax Benefit                              (235,184)              --


Changes in Assets and Liabilities:
    (Increase) Decrease in:
    Accounts Receivable                                 (7,785)         870,515
    Inventory                                         (324,506)        (126,586)
    Other Current Assets                               (88,376)         (55,703)
    Other Assets                                       (93,544)           1,887

Increase (Decrease) in:
    Accounts Payable and Accrued Expenses              162,329         (206,690)
    Other Current Liabilities                               --               --
    Income Tax Payable                                  (9,826)          (8,927)
                                                   -----------      -----------

Total Adjustments                                  $  (509,395)     $   542,631
                                                   -----------      -----------

NET CASH - OPERATING ACTIVITIES - FORWARD          $  (486,207)     $   576,964
                                                   -----------      -----------

INVESTING ACTIVITIES:
    Capital Expenditures                           $  (183,208)     $   (59,013)
                                                   -----------      -----------

NET CASH - INVESTING ACTIVITIES                    $  (183,208)     $   (59,013)
                                                   -----------      -----------

FINANCING ACTIVITIES -
    Floor Plan Payable- Net                        $  (605,691)     $  (315,166)
                                                   -----------      -----------

NET CASH - FINANCING ACTIVITIES                    $  (605,691)     $  (315,166)
                                                   -----------      -----------

NET (DECREASE) INCREASE IN CASH AND
   CASH EQUIVALENTS                                $(1,275,106)     $   202,785

CASH AND CASH EQUIVALENTS AT BEGINNING
   OF PERIODS                                      $ 7,064,644      $ 6,935,623
                                                   -----------      -----------

CASH AND CASH EQUIVALENTS AT END OF PERIODS        $ 5,789,538      $ 7,138,408
                                                   -----------      -----------


See Notes to Consolidated Financial Statements.

                                       4
<PAGE>


                       TRANSNET CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

(1.)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       (a) Consolidation: The consolidated financial statements include the
       accounts of the Corporation and its wholly owned subsidiary, Century
       American Corporation. Intercompany transactions and accounts have been
       eliminated in consolidation.

       (b) Inventory: Inventory consists of finished goods. The Corporation's
       inventory is valued at the lower of cost (determined on the average cost
       basis) or market.

       (c) Cash and Cash Equivalents: For the purposes of the statement of cash
       flows, the Corporation considers highly liquid debt instruments,
       purchased with a maturity of three months or less, to be cash
       equivalents.

       (d) Earnings Per Share: Earnings per common share - basic are based on
       4,805,804 weighted shares outstanding for the six-month period ended
       December 31, 2004 and on 4,774,804 weighted shares outstanding for the
       six-month period ended December 31, 2003. Earnings per common share -
       diluted are based on 4,935,243 weighted shares outstanding for the
       six-month period ended December 31, 2004 and on 4,912,276 weighted shares
       outstanding for the six-month period ended December 31, 2003.

       (e) In the opinion of management, the accompanying unaudited consolidated
       financial statements contain all adjustments consisting only of normal
       recurring adjustments necessary to present fairly the financial position,
       the results of operations and cash flows for the periods presented.

       (f) These statements should be read in conjunction with the summary of
       significant accounting policies and notes contained in the Corporation's
       annual report on Form 10-K for the year ended June 30, 2004.

       (g) The results of operations for the three months ended December 31,
       2004 are not necessarily indicative of the results to be expected for the
       entire year.

       (h) In November 2004, the Financial Accounting Standards Board ("FASB")
       issued SFAS No. 151, "Inventory Costs - an amendment to ARB No. 43." This
       statement provides guidance to clarify the accounting for abnormal
       amounts of idle facility expense, freight handling costs, and wasted
       material (spoilage), among other production costs. Provisions of ARB No.
       43 stated that under some circumstances, items such as idle facility
       expense, excessive spoilage and other costs "may" be so abnormal as to
       require treatment as current period charges. This statement requires that
       those items be recognized as current period charges regardless of whether
       they meet the criterion of so abnormal. In addition, SFAS 151 requires
       that allocation of fixed production overheads to the costs of conversion
       be based on the normal capacity of the production overheads to the costs
       of conversion be based on the normal capacity of the production
       facilities. Adoption of the Statement is not expected to have a material
       impact on the financial statements of the Company.

       In November 2004, the FASB issued SFAS No. 152 "Accounting for Real
       Estate time-Sharing Transactions - An amendment of SFAS No. 66 and 67.
       This Statement amends SFAS No. 66. "Accounting for Sales of Real Estate,
       to reference the financial accounting

                                       5
<PAGE>


       and reporting guidance for real estate time-sharing transactions that is
       provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real
       Estate Time-Sharing Transactions. This Statement also amends SFAS No. 67,
       "Accounting for Costs and Initial Rental Operations of Real Estate
       Projects," to state the guidance for (a) incidental costs and (b) costs
       incurred to sell real estate projects does not apply to real estate
       time-sharing transactions. The accounting for those operations and costs
       is subject to guidance in SOP 04-2. Effective for financial statements
       with fiscal years beginning after June 15, 2005. Adoption of this
       Statement is not expected to have a material impact on the financial
       statements of the Company.

       In November 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
       Assets - an amendment to APB No. 29." This Statement amends Opinion No.
       29 to eliminate the exception for nonmonetary exchanges of similar
       productive assets and replaces it with a general exception for exchanges
       of nonmonetary assets that do not have commercial substance. A
       nonmonetary exchange has commercial substance if the future cash flows of
       the entity expected to change significantly as a result of the exchange.
       Adoption of this statement is not expected to have a material impact on
       the financial statements of the Company.

       In December 2004, the FASB issued SFAS No. 123 (revised 2004),
       "Share-Based Payment" (SFAS No. 123R). SFAS No 123R requires companies to
       recognize in the income statement the grant date fair value of stock
       options and other equity-based compensation issued to employees. SFAS No.
       123R eliminates the intrinsic value-based method prescribed by Accounting
       Principles Board Opinion No. 25, "Accounting for Stock Issued to
       Employees", and related interpretations, that the Company currently uses.
       SFAS No. 123R requires the Company to adopt the new accounting provisions
       beginning on July 1, 2005. Management estimates that the adoption will
       not have a material impact on the financial statements of the Company.

       (i) At December 31, 2004, the Corporation had a stock-based employee
       compensation plan. The Corporation accounts for the plan under the
       measurement principals of APB Opinion No. 25, Accounting for Stock Issued
       to Employees, and related Interpretations. No stock-based employee
       compensation cost is reflected in net income, as all options granted
       under those plans had an exercise equal to the market value of the
       underlying common stock on the date of grant. The following tables
       illustrate the effect on net income and earnings per share if the
       Corporation had applied the fair value recognition provisions of FASB
       Statement No. 123 to stock based employee compensation.

                                       6
<PAGE>


                                                         THREE MONTHS ENDED
                                                            DECEMBER 31,
                                                      2 0 0 4          2 0 0 3
                                                    -----------      -----------

NET [LOSS] INCOME:
   As Reported                                      $  (141,212)     $       342

DEDUCT:
   Stock Based Employee Compensation Expense
    Determined under the Fair Value Based
     Method - Net of Tax                                     --               --
                                                    -----------      -----------

   PRO FORMA NET [LOSS] INCOME                         (141,212)             342
                                                    -----------      -----------

BASIC [LOSS] EARNINGS PER SHARE:
   As Reported                                      $     (0.03)     $      0.00
   Pro-Forma                                        $     (0.03)     $      0.00

DILUTED [LOSS] EARNINGS PER SHARE:
   As Reported                                      $     (0.03)     $      0.00
   Pro-Forma                                        $     (0.03)     $      0.00


                                                          SIX MONTHS ENDED
                                                            DECEMBER 31,
                                                      2 0 0 4          2 0 0 3
                                                    -----------      -----------

NET INCOME:
   As Reported                                      $    23,188      $    34,333

DEDUCT:
   Stock Based Employee Compensation Expense
    Determined under the Fair Value Based
     Method - Net of Tax                                 (7,929)              --
                                                    -----------      -----------

   PRO FORMA NET INCOME                                  15,259           34,333
                                                    -----------      -----------

BASIC EARNINGS PER SHARE:
   As Reported                                      $      0.00      $      0.00
   Pro-Forma                                        $      0.00      $      0.00

DILUTED EARNINGS PER SHARE:
   As Reported                                      $      0.00      $      0.00
   Pro-Forma                                        $      0.00      $      0.00



(2.)   INCOME TAXES

       The Corporation has a deferred tax asset of $458,076 and a deferred tax
       liability of $58,220 based upon temporary timing differences including
       inventory capitalization, allowance for doubtful accounts, vacation pay
       accruals and depreciation.

                                       7
<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Revenues for the three months ended December 31, 2004 were $7,663,278 as
compared with $7,386,691 for the quarter ended December 31, 2003. For the
quarter ended December 31, 2004 the Corporation reported a net loss of $141,212
as compared with earnings of $342 for the similar period in the prior fiscal
year. For the six months ended December 31, 2004 revenues were $18,356,505, as
compared to $17,020,922 reported for the similar period in the prior fiscal
year, with net income of $23,188 for the six-month period ended December 31,
2004, compared with net income of $34,333 for the same period in the prior
fiscal year. Results for the three and six month periods ended December 31,
2004, included tax benefits of $124,403 and $235,184, respectively. Despite a
sluggish IT environment, the Corporation was able to maintain revenue levels in
fiscal 2005 as compared to fiscal 2004.

The net loss for the quarter ended December 31, 2004 was primarily attributable
to increased selling, general and administrative expenses. These expenses
increased primarily as a result of the Corporation's expansion of its sales
staff based upon its anticipated growth in the internet telephony marketplace.
During the quarter, revenues from hardware sales increased slightly due to
increased demand primarily from the educational market. Service related revenues
continued to be impacted by project delays and a major customer's budget
reductions. The income for the six-month period ended December 31, 2004 is also
attributable the income tax benefit. The income tax benefit was primarily
derived from the Corporation decreasing the deferred tax asset valuation
allowance recorded at June 30, 2004. The decrease in the deferred tax asset
valuation allowance was recorded in proportion to those existing net operating
losses that the Corporation currently expects to realize in connection with
certain IRS carryback provisions.

During the referenced periods, the Corporation's clients were conservative in
their IT budgetary spending. As a result, management refocused its attention on
utilization rates of its service technicians and selling and administrative
expenses to reduce expenses. Because project delays are client-based, management
cannot determine in which quarters services will be provided, nor can management
give assurances that delays will not be longer than expected or that orders will
be given. Indications of interest, however, have been received by customers with
respect to IP telephony and security technology, areas which management has
targeted as growth areas for the Corporation. Management concentrates it efforts
on technical service and support, and on sales of network and system integration
products that yield higher profit margins, and continues its adherence to and
implementation of cost control measures. Service and training related revenues
are significant in their contributions to earnings because these operations
yield a higher profit margin than equipment sales. For the six-month periods
ended December 31, 2004 and 2003, respectively, revenues from the provision of
service, support, outsourcing and network integration were largely the result of
the Corporation renewing and/or entering into service contracts with a number of
large corporate clients. Most of these contracts are short-term, usually twelve
months or less, and contain provisions which permit early termination. Although
the contracts generally contain renewal terms, there is no assurance that such
renewals will occur.

During the fiscal years discussed, the computer industry has experienced a trend
of decreasing prices of computers and related equipment. Management believes
that this trend will continue. Industrywide, the result of price erosion has
been lower profit margins on sales, which require businesses to sell a greater
volume of equipment to maintain past earning levels. Another result of the price
decreases has been intensified competition within the industry, including the
consolidation of businesses through merger or acquisition, the initiation of
sales by many

                                       8
<PAGE>


manufacturers directly to the end-user, and the entrance of manufacturers into
technical services business. Management believes that the adoption of policies
by many larger corporate customers, which limit the number of vendors permitted
to provide goods and services for specified periods of time, has further
increased price competition.

The Corporation's performance is also impacted by other factors, many of which
are not within its control. These factors include: the short-term nature of
client's commitments; patterns of capital spending by clients; the timing and
size of new projects; pricing changes in response to competitive factors; the
availability and related costs of qualified technical personnel; timing and
customer acceptance of new product and service offerings; trends in IT
outsourcing; product constraints; and industry and general economic conditions.

To meet these competitive challenges and to maximize the Corporation's profit
margin, management has modified its marketing strategy during these years and
has enforced expense controls. Management also utilizes new trends such as
manufacturers' direct shipment and billing of the customers in exchange for
payment to the Corporation of an "agency fee" as a means to reduce equipment
related costs while increasing profits. Management believes that this approach,
although it may impact revenues, insulates the corporation from challenges that
may accompany sudden price decreases, hardware obsolescence and delays
collection of receivables.

Management's current marketing strategy is designed to emphasize provision of
technical services and sales of lower revenue/higher profit margin products
related to service and support operations. In this regard, management continues
its concentration on sales of network and system integration products that yield
higher profit margins. Management's efforts include targeting commercial,
educational and governmental customers who provide marketplaces for a wide range
of products and services at one time, a cost-effective approach to sales. These
customers often do not have their own technical staffs and outsource their
computer service requirements to companies such as TransNet. Although there is
uncertainty as to the economic future, management is cautiously optimistic,
particularly with respect to education sales. Management believes it maximizes
profits through concentration on sales of value-added applications; promotion of
the Corporation's service and support operations; and strict adherence to cost
cutting controls. In light of the above, management emphasizes and continues the
aggressive pursuit of an increased volume of sales of technical service and
support programs, and promotion of its training services. In the near term, the
Corporation believes that product sales will continue to generate a significant
percentage of the Company's revenues. In addition, the Corporation's buying
agreement with Ingram Micro, Inc. enhances the Corporation's competitive edge
through product discounts unavailable through other sources.

With respect to selling, general and administrative expenses, expenses increased
as a result of management's expansion of its sales and technical staffs, and
increased personnel related costs (primarily health insurance costs). For the
quarter ended December 31, 2004, selling, general and administrative costs
increased to approximately 21% of revenue for the quarter, and 18% for the six
month period ended December 31, 2004, from approximately 18% of revenue for the
quarter and 17% for the six month period ended December 31, 2003. Management
continues its efforts to control and reduce administrative and personal related
costs.

LIQUIDITY AND CAPITAL RESOURCES

There are no material commitments of the Corporation's capital resources.

The Corporation currently finances a portion of its accounts receivable and
finances purchases of portions of its inventory through floor-planning
arrangements under which such inventory secures

                                       9
<PAGE>


the amount outstanding. The amount due under this financing decreased for the
quarter and six months ended December 31, 2004 as compared to the same periods
in 2003, due to the purchase of equipment from sources outside the floor
planning. Inventory increased in the quarter and six-month periods due to orders
received at the end of the periods ended December 31, 2004 as compared to the
corresponding periods in the prior fiscal year.

Accounts receivable and payable increased for the quarter and six months ended
December31, 2004 as compared to the same periods in 2003 as a direct result of
the increase in revenues and, with respect to payables, due to an increase in
purchases to satisfy customer orders. Cash levels decreased in the three and
six-months ended December 31, 2004 as compared to the corresponding periods in
2003 as a result of increased accounts receivables and payables as a result of
increased hardware sales.

Interest income decreased in the 2004 quarter and six month period due to lesser
amounts invested, as compared to the same periods in 2003.

For the fiscal quarter and six months ended December 31, 2004, as in the similar
periods in the prior year, the internal resources of the Corporation were
sufficient to enable the Corporation to meet its obligations.

In the first quarter of fiscal 1998, management was apprised of an unasserted
possible claim or assessment involving the Corporation's Pension Plan. The Plan
was adopted in 1981 as a defined benefit plan. In 1989, various actions were
taken by the Corporation to terminate the Plan, to convert it to a defined
contribution plan and to freeze benefit accruals. No filing for plan termination
was made with the Pension Benefit Guaranty Corporation (the "PBGC").
Additionally, a final amended and restated plan document incorporating the
foregoing amendments and other required amendments including those required by
the Tax Reform Act of 1986 do not appear to have been properly adopted. In
addition, since 1989, it appears that certain operational violations occurred in
the administration of the Plan including the failure to obtain spousal consent
in certain instances where it was required.

The Corporation decided to (i) take corrective action under the IRS Walk-in
Closing Agreement Program ("CAP"), (ii) applied for a favorable determination
letter with respect to the Plan from the IRS, and (iii) terminate the Plan. The
CAP program provides a correction mechanism for "non-amenders" such as the
Corporation. Under CAP, the Corporation was subject to a monetary sanction. In
addition, the Corporation was required to correct, retroactively, operational
violations, and to pay any resulting excise taxes and PBGC premiums and
penalties that may be due. In this regard, in connection with settlement
negotiations with the IRS, during the December 2000 quarter the Corporation made
a contribution to the Plan and made payment of specified sanctions. During the
March 2001 quarter, the Corporation finalized a settlement agreement with the
IRS and is awaiting resolution with the PBGC.


THE MATTERS DISCUSSED IN MANAGEMENT'S DISCUSSION AND ANALYSIS AND THROUGHOUT
THIS REPORT THAT ARE FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT MANAGEMENT
EXPECTATIONS THAT INVOLVE RISK AND UNCERTAINTIES. POTENTIAL RISKS AND
UNCERTAINTIES INCLUDE, WITHOUT LIMITATION: THE IMPACT OF ECONOMIC CONDITIONS
GENERALLY AND IN THE INDUSTRY FOR MICROCOMPUTER PRODUCTS AND SERVICES;
DEPENDENCE ON KEY VENDORS AND CUSTOMERS; CONTINUED COMPETITIVE AND PRICING
PRESSURES IN THE INDUSTRY; PRODUCT SUPPLY SHORTAGES; OPEN-SOURCING OF PRODUCTS
OF VENDORS, INCLUDING DIRECT SALES BY MANUFACTURERS; RAPID PRODUCT IMPROVEMENT
AND TECHNOLOGICAL CHANGE, SHORT PRODUCT LIFE CYCLES AND RESULTING OBSOLESCENCE
RISKS; TECHNOLOGICAL DEVELOPMENTS; CAPITAL AND FINANCING AVAILABILITY; AND OTHER
RISKS SET FORTH HEREIN.

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<PAGE>


ITEM 4.  CONTROL AND PROCEDURES

The Chief Executive Officer of the Corporation has concluded, based on his
evaluation as of a date within 90 days prior to the date of the filing of this
Report, that the Corporation's disclosure controls and procedures are effective
to ensure that information required to be disclosed by the Corporation in the
reports filed or submitted by it under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and include
controls and procedures designed to ensure that information required to be
disclosed by the Corporation in such reports is accumulated and communicated to
the Corporation's management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.

There were no significant changes in the Corporation's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of such evaluation.


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<PAGE>


                                    PART II.

                                OTHER INFORMATION


ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K

         A. Exhibits -

             31.1 Certification required by Section 302
             31.2 Certification required by Section 302
             32  Certification required by Section 906

         B. Reports on Form 8-K -

             On November 4, 2004, TransNet Corporation filed a Form 8-K under
             Item 9.




                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      TRANSNET CORPORATION
                                      (Registrant)



                                      /s/ STEVEN J. WILK
                                      --------------------------------------
                                      Steven J. Wilk, President
                                      Chief Executive Officer


                                      /s/ JOHN J. WILK
                                      ---------------------------------------
                                      John J. Wilk,
                                      Principal Financial and Accounting Officer
                                      and Chairman of the Board of Directors




DATE:  February 14, 2005

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